DETROIT – BorgWarner on Tuesday announced it will acquire fellow auto supplier Delphi Technologies in an all-stock transaction that values Delphi at about $3.3 billion.
Shares of London-based Delphi, which was spun-off from General Motors roughly two decades ago, skyrocketed more than 62% in morning trading Tuesday to nearly $16 a share. Shares of Auburn Hills, Mich.-based BorgWarner were down about 7% to roughly $35.50.
The two major auto suppliers have entered into a definitive transaction agreement that has been approved by the boards of directors of both companies. The transaction is expected to close in the second half of 2020, according to the companies.
Under the deal, Delphi stockholders will receive a fixed exchange ratio of 0.4534 share of BorgWarner common stock per Delphi share. Current BorgWarner stockholders will own about 84% of the combined company, while current Delphi Technologies stockholders are expected to own 16%.
The combined $14.5 billion company will be led by BorgWarner President and CEO Frederic Lissalde and BorgWarner CFO Kevin Nowlan, and will operate as BorgWarner. The combined company will be headquartered in Auburn Hills, Mich.
"Delphi Technologies will bring proven leading power electronics technologies, talent and scale that will complement our hybrid and electric vehicle propulsion offerings," Lissalde said in a release. "As a combined company, we look forward to delivering enhanced solutions to our customers while driving increased value for our stockholders."
The sides expect approximately $125 million of run-rate cost efficiencies by 2023. The acquisition is meant to strengthen BorgWarner's power electronics products, capabilities and scale, according to the company.
BorgWarner on Tuesday also announced that its Board of Directors has authorized a share repurchase program of up to $1 billion to be executed over the next three years.